PAM_334_Fall_2008_Lecture_11

PAM_334_Fall_2008_Lecture_11 - PAM3340 Lecture11 Agenda...

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PAM 3340 Lecture 11 Agenda: Corporation as a dynamic, equilibrating  mechanism The economics of corporate control Agency effects of corporate control  transactions Takeover law
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The Corporation as a Dynamic  Mechanism We have thought of the corporation as  essentially unchanging across time In reality, the corporation is  dynamic almost constantly changing In particular,  the boundaries of the firm  are frequently changing  
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The Corporation as a Dynamic  Mechanism (con’t)  In law, corporation is a legal person, like  an individual Better to think of the corporation as an  economist would: as an “equilibrating  mechanism”  A market is one example of an  equilibrating mechanism (maximizing  total surplus)
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The Corporation as a Dynamic  Mechanism (con’t) Think of the corporation as always  headed toward an equilibrium Maximizing shareholder value
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Mechanism (con’t) Boundaries and structure of the firm can  of that change How can the corporation change form? Mergers
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This document was uploaded on 10/26/2011 for the course PAM 3340 at Cornell.

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PAM_334_Fall_2008_Lecture_11 - PAM3340 Lecture11 Agenda...

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